Probability

Basic Business Statistics

11th Edition

Chapter 4 Basic Probability

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.

Chap 4-1

Learning Objectives

In this chapter, you learn: Basic probability concepts Conditional probability To use Bayes’ Theorem to revise probabilities Various counting rules

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc..

Chap 4-2

Basic Probability Concepts

Probability – the chance that an uncertain event will occur (always between 0 and 1) Impossible Event – an event that has no chance of occurring (probability = 0) Certain Event – an event that is sure to occur (probability = 1)

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc..

Chap 4-3

Assessing Probability

There are three approaches to assessing the probability of an uncertain event:

1. a priori -- based on prior knowledge of the process

probability of occurrence =

Assuming all outcomes are equally likely

X number of ways the event can occur = T total number of elementary outcomes number of ways the event can occur total number of elementary outcomes

2. empirical probability

probability of occurrence =

3. subjective probability based on a combination of an individual’s past experience, personal opinion, and analysis of a particular situation

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 4-4

Example of a priori probability

Find the probability of selecting a face card (Jack, Queen, or King) from a standard deck of 52 cards.

Probability of Face Card =

number of face cards X = T total number of cards

X 12 face cards 3 = = T 52 total cards 13

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc..

Chap 4-5

Example of empirical probability

Find the probability of selecting a male taking statistics from the population described in the following table:

Taking Stats Male Female Total 84 76 160 Not Taking Stats 145 134 279 Total 229 210 439

Probability of male taking stats =...